Grubhub Deal Gives Amazon New Ammo in Walmart Food Fight

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Amazon may be deeply embedded in consumers’ daily routines in so many aspects of their life — from ordering household essentials to streaming content — but the behemoth has yet to make a dent in competitor Walmart’s lead in food and beverage categories. Now the company is expanding its food offerings with a commercial agreement with Grubhub announced Wednesday (July 6).

Amazon revealed that U.S. Prime customers receive a free one-year Grubhub+ membership to order restaurant delivery without the fee. Grubhub’s parent company Just Eat Takeaway shared in a news release that, through the deal, Amazon could take a 2% stake in the aggregator and that, if the move performs well insofar as bringing new customers to Grubhub, Amazon could grow its stake to 15%.

“I am incredibly excited to announce this collaboration with Amazon that will help Grubhub continue to deliver on our long-standing mission to connect more diners with local restaurants,” Adam DeWitt, CEO of Grubhub, said in a statement. “Amazon has redefined convenience with Prime, and we’re confident this offering will expose many new diners to the value of Grubhub+ while driving more business to our restaurant partners and drivers.”

The news comes amid months of Just Eat Takeaway “actively exploring” the possibility of a partial or full sale of the Chicago, Illinois-based aggregator or bringing in a strategic partner.

Related news: Just Eat Takeaway Explores Sale of Grubhub as US Competitors Pull Ahead

Certainly, Amazon Prime has a wide member base — and if those members take advantage of this deal, it could inject new lifeblood into Grubhub. PYMNTS research from the April “The Benefits Of Membership” report, which drew a census-balanced survey of more than 2,100 U.S. consumers, found that nearly two-thirds (64%) were Amazon Prime subscribers, amounting to an estimated 166 million consumers. If even a tenth of those subscribers were to take advantage of the deal, it could be a significant boost for the aggregator.

Get the report: The Benefits Of Membership

Amazon, for its part, has the opportunity to leverage the partnership to integrate restaurant meals into its offerings.

PYMNTS findings reveal that Walmart’s food and beverage sales outpace Amazon’s 10-to-1, with the former’s totaling $245 billion — a 19.2% share of the category — in 2020, and the latter’s only $24.3 billion —a 1.9% share. With Walmart reigning as the world’s largest grocery retailer, Amazon may be getting the sense that, if it wants to minimize Walmart’s food lead, it may be better off going after the restaurant category.

PYMNTS’ Karen Webster notes that, with Whole Foods Market stores already equipped with commercial kitchens, Amazon also has the opportunity to get into the ghost kitchen/virtual brand space. This new deal with Grubhub means that if Amazon does so, it will already have access to the driver infrastructure to get meals into consumers’ hands.

“Amazon and Whole Foods won’t replace restaurants — but they could put a dent in traditional fast-food sales, and the takeout or delivery business of independent restaurants and the sales they represent for aggregators and operators,” Webster writes.

See also: Amazon’s Fight for a Seat at the Dinner Table